AUDIT SUMMARY OF 30 PEs 30-07-09 FOR THE WEBSITE

Siganike.Baruti

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PROCUREMENT AUDIT REPORT FOR 30 PROCURING ENTITIES June, 2009 1. Introduction In view of its mandate under Section 7(1)(j) of the Public Procurement Act (PPA), Cap 410 , the Public procurement Regulatory Authority (PPRA) carried out procurement audits in thirty (30) procuring entities (PEs) between July 2008 and May 2009 for procurements made during the financial year 2007/08. The audited procuring entities comprised of thirteen (13) Local Government Authorities (LGAs) and seventeen (17) Ministries, Independent Departments and Agents/ Authorities (MDAs). The audits were financed from the Public Financial Management Reform Programme (PFMRP) funds and they were intended to determine whether the procedures, processes and documentations for procurement and contracting are in accordance with the provisions of the PPA, Cap 410 its regulations and the standard documents prepared by PPRA and that procurement carried out achieved the expected economy and efficiency (value for money for the allocated resources), and the implementation of contracts conformed to the terms there of. The primary objective of the procurement audits was to: provide the government with independent information, assurance and opinion about economy, efficiency and effectiveness in the use of public funds; ensure that all eligible suppliers, contractors ...

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• Publié par: Phoim
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• Langue: English

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PROCUREMENT AUDIT REPORT

FOR 30 PROCURING ENTITIES

June, 2009

Page | 1

1. Introduction

In view of its mandate under Section 7(1)(j) of the Public Procurement Act

(PPA), Cap 410 , the Public procurement Regulatory Authority (PPRA) carried

out procurement audits in thirty (30) procuring entities (PEs) between July

2008 and May 2009 for procurements made during the financial year 2007/08.

The audited procuring entities comprised of thirteen (13) Local Government

Authorities (LGAs) and seventeen (17) Ministries, Independent Departments

and Agents/ Authorities (MDAs).

The audits were financed from the Public Financial Management Reform

Programme (PFMRP) funds and they were intended to determine whether the

procedures, processes and documentations for procurement and contracting

are in accordance with the provisions of the PPA, Cap 410 its regulations and

the standard documents prepared by PPRA and that procurement carried out

achieved the expected economy and efficiency (value for money for the

allocated resources), and the implementation of contracts conformed to the

terms there of.

The primary objective of the procurement audits was to: provide the

government with independent information, assurance and opinion about

economy, efficiency and effectiveness in the use of public funds; ensure that

all eligible suppliers, contractors and service provides are given equal

opportunity to compete in providing goods, executing works or providing

services, and; ensure that there is integrity, accountability, fairness and

transparency in the procurement process. The secondary objective was to

identify weaknesses in complying with the provisions in the PPA, Cap 410 and

its Regulations to enable appropriate measures to be taken including

implementation of appropriate capacity building strategies and improving

controls.

2. Procurement Audit Results

Generally, the outcome of the audits indicated an average level of compliance

of sixty six percent (66%) computed from thirteen established compliance

indicators. The average level of compliance for MDAs was seventy two

percent (72%) and sixty five percent (65%) for LGAs. The National Assembly

attained the highest average compliance level of ninety two percent (92%)

while Longido District Council attained the lowest compliance level of twenty

percent (20%).

The areas where PEs performed above average (Above 50%) were:

Establishment and composition of Tender Boards; Advertisement of bid

opportunities; Establishment and composition of Procurement Management

Units (PMUs); Complying with tender preparation times as stipulated in the

Regulations; Independence of functions between AO, TB, PMU, Evaluation

Committees and User Departments; Preparation of Annual Procurement Plan;

Complying with compulsory approvals; The use of Standard Tender

Documents; and Contracts implementation; and Complying with the methods

of procurements as stipulated in the Regulations. The areas where PEs

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performed below average were: Publication of award; Record keeping; and

Quality assurance and control.

The good performance is a result of various strategies which are being

implemented by the Authority through various funding including ADB, PFMRP

and USAID. Specific strategies include the System for Checking and

Monitoring and Capacity Building Strategy. Under the implementation of the

system for checking and monitoring, twenty five audited procuring entities

were visited before the audits to assess their compliance to PPA, CAP 410

and Regulations, and recommendations were provided to remove/minimize

the observed weaknesses. All the visited PEs attained compliance levels of

above 50%. The observed performance shows that the previous

recommended measures were implemented to an acceptable level.

The list of the audited procuring entities and their average compliance levels

is shown in

Table 1

and the analysis on the general compliance is provided in

Table 2

. The average performance for all 13 CPIs is shown in

figure 1.

Table 1:

List of Audited Procuring Entities

Procuring Entity

Average

Compliance

1.

Tanzania Food and Drug Authority

87

2.

Institute of Finance Management

89

3.

Mtwara - Mikindani Municipal Council

77

4.

Mvomelo District Council

68

5.

Insurance Supervisory Department

60

6.

Lindi Town Council

70

7.

Institute of Accountancy Arusha

65

8.

Ministry of Livestock Development and Fisheries

81

9.

Prime Minister's Office - Regional Administration and

Local Government

79

10.

Shinyanga Municipal Council

72

11.

National Electoral Commission

80

12.

Tanzania Social Action Fund (TASAF)

78

13.

Tabora District Council

52

14.

Shinyanga Urban Water Supply and Sewarage

Authority (SHUWASA)

53

15.

National Insurance Corporation

69

16.

Usafiri Dar es Salaam

50

17.

Drilling and Dam Construction Agency

78

18.

Government Chemist Laboratory Agency

82

19.

Temeke Municipal Council

75

20.

Tanzania Public Service College

70

21.

Serengeti District Council

39

22.

Karatu District Council

37

23.

Simanjiro District Council

54

Page | 3

24.

Longido District Council

20

25.

College of African Wildlife Management - MWEKA

35

26.

National Assembly

92

27.

Regional Administrative Secretariat - Dodoma

72

28.

Morogoro District Council

52

29.

Singida Municipal Council

60

30.

Singida District Council

80

Table 2:

Outcome of the Procurement Audits as per the established

Compliance Indicators

Indicator

PERFORMANCE

DATA

Outcome of the review

1.Establishment

and composition

of tender boards

Existence of a tender

board in accordance

with the requirements

of

the

Act

and

Regulations

10% of the PEs have not

established tender boards in

accordance with the PPA and

its Regulations

2.Establishment

and composition

of PMUs

Existence of a PMU in

accordance with the

requirements of the Act

and Regulations

46% of the PEs have not

established

PMUs

in

accordance with the PPA and

its Regulation

3. Independence of

functions

Percentage of tenders

in which there was no

interference

between

individual functions

35%

of

the

audited

procurements had interference

between

the

individual

functions of the Accounting

Officer, Tender Boards, PMU

and user Departments.

4. Annual

Procurement

plan

Prepared and properly

implemented

annual

procurement plan

47% of the PEs did not

prepare annual procurement

plans for the financial year

2008/09

5. Compulsory

Approvals

Percentage

of

tenders/contracts

which

received

all

compulsory approvals

in various processes

32%

of

the

audited

procurements did not receive

all compulsory approvals in

the procurement processes

contrary to the requirements in

the PPA and its Regulations

6. Advertisement of

bid opportunities

Percentage of open

bidding

procedures

publicly advertised

17% of the tenders under

open bidding process were not

advertised

to

the

public

contrary to the requirements of

Page | 4

Indicator

PERFORMANCE

DATA

Outcome of the review

the PPA and its Regulations

7. Publication of

awards

Percentage of contract

awards disclosed to

the public

57%

of

the

audited

procurements indicated that

contract awards were not

communicated to the public

contrary to the requirements of

the PPA and its Regulations

8. Time for

preparation of

bids

Percentage of tenders

complying

with

the

stipulated time in the

Act and regulations

10%

of

the

audited

procurements indicated that

the time provided for the

preparation of bids did not

comply with the minimum time

provided in the PPA and its

Regulations

9. Methods of

procurements

Percentage of tenders

using

authorized

methods

of

procurement

in

accordance with their

limits of application

8%

of

the

audited

procurements did not use

methods of procurement in

accordance with their limits of

application as provided in the

PPA and its Regulations

10. The use of

standard tender

documents

Percentage of tenders

using

standard/

approved

tender

documents

In the 32% of the audited

procurements standard tender

documents were not used

contrary to the requirements of

the PPA and its regulations

11. Procurement

records

Percentage of tenders

with complete records

53%

of

the

audited

procurements had either no

procurement

records

or

incomplete records.

12. Quality

assurance and

Control

Percentage of tenders

with adequate quality

assurance and control

systems

56%

of

the

audited

procurements indicated that

there

were

no

quality

assurance

and

control

systems.

13. Contract

implementation

Percentage

of

contracts which have

been implemented as

per

the

terms

of

contract

Contracts in 33% of the

audited procurements were

not implemented as per the

terms of the contract.

Page | 5

Figure 1:

The average performance of the 30 PEs on 13 CPIs

3. Analysis of the Audit Results

Assessment of the observed major weaknesses revealed the following:-

a)

Lack of properly established PMUs was contributed by inadequate

qualified procurement specialists in the market, and lack of awareness.

The major effects include lack of procurement coordination within the

Procuring Entities resulting to inefficiency and mis-procurement.

It is recommended to speed up professionalization of the

procurement cadre, enhancing coordination with training

institutions to align their curricula to meet the requirements in the

market, and to enhance training and compliance monitoring.

b)

Non preparation of Annual Procurement Plans (APP) was contributed

by lack of qualified procurement specialists in the PMUs, lack of

appropriate skills, lack of coordination between PMUs and user

departments, reluctance to change and lack of integration of the APPs

preparation with budget preparation process.

Lack of APPs contributes

to inefficiency, lack of control, increased procurement transaction

costs, emergency procurements, splitting of procurements to avoid

competitive procurement methods and excessive use of minor value

procurement method.

It is recommended to provide appropriate training (with practical

exercises), establish PMUs with appropriate skilled staff,

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integrating preparations of APPs with budget preparation process

and enhance compliance monitoring.

c)

The reasons for not using standard bidding documents (SBDs) were

contributed by lack of qualified procurement specialists, lack of

awareness on the available SBDs, lacks of skills on how to use SBDs,

and some of the SBDs are complex and voluminous compared to the

type and value of procurements resulting to high costs of preparing

tender documents.

The effects of not using SBDs includes unfair contracts awards,

complaints and inappropriate allocations of rights, obligations and risks

in the contracts resulting to contract disputes, delayed completion of

projects, poor quality of works and services etc.

It is recommended that PEs be required to establish PMUs with

appropriate skilled staff, enhance dissemination of SBDs, and

simplifying SBDs to match with the conditions and nature of

procurements.

d)

Poor record keeping was caused by lack/inadequate record

management skills, inadequate facilities, inadequate office space, and

deliberate misplacement of documents.

The effects of poor record

keeping include poor management of procurements, corruption, theft

and loss of public properties.

It is recommended that staff in PMUs be trained on record

management, establishing procurement record management

system, implementing the Procurement Information Management

System and providing adequate facilities and offices to PMUs.

e)

Lack of quality control and poor contracts management was

contributed by inadequate resources (human, financial, supervision

vehicles, quality control tools etc), inadequate project supervision skills,

lack of guidelines for community based projects, inadequate contracts

management skills and corruption.

The effects of poor contracts

management and lack of quality control includes poor quality of works,

goods and services; projects cost and time overrun; payment delays;

payment for undelivered goods, works and services; contract disputes;

and not realizing value for money.

It is recommended that PEs should make sure that adequate

resources for project supervision are made available; standard

guidelines for procurement under community based projects

should be prepared, standard project supervision manual should

be prepared in line with SBDs, provide training on contracts

management; and implement the recently prepared anti-

corruption strategy.

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4. The Way Forward

Since PPRA’s target is to ensure that the average compliance level of

procuring entities reaches eighty percent (80%) by the end of the financial

year 2010/11, it is imperative to focus the available resources to areas which

will bring maximum impact to the capacity of procuring entities in complying

with the PPA and its Regulations. These are the areas where compliance

levels were below eighty percent (80%).

On the basis of the performance indicators, the following areas (with the

compliance levels in brackets) need maximum attention in terms of training

and monitoring in the next financial year: Establishment and composition of

PMUs (54%); Preparation of Annual Procurement Plan (53%) [

Improvement in

this area will automatically increase compliance in areas such as obtaining

compulsory approvals in the procurement processes, advertising of bid

opportunities, providing adequate time for bidders to prepare bids, and

applying appropriate methods of procurements]

; Using standard tender/

contract documents (68%); Records keeping (47%); Quality assurance and

control (44%); and Contracts management. In addition, issues on tender

evaluation should be addressed by providing proper applied training to PEs

staff.